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The Similarity Heuristic

Author

Listed:
  • Daniel Read

    (Durham Business School)

  • Yael Grushka-Cockayne

    (London Business School)

Abstract

Decision makers are often called on to make snap judgments using fast-and- frugal decision rules called cognitive heuristics. Although early research into cognitive heuristics emphasized their limitations, more recent research has focused on their high level of accuracy. In this paper we investigate the performance a subset of the representativeness heuristic which we call the similarity heuristic. Decision makers who use it judge the likelihood that an instance is a member of one category rather than another by the degree to which it is similar to others in that category. We provide a mathematical model of the heuristic and test it experimentally in a trinomial environment. The similarity heuristic turns out to be a reliable and accurate choice rule and both choice and response time data suggest it is also how choices are made.

Suggested Citation

  • Daniel Read & Yael Grushka-Cockayne, 2007. "The Similarity Heuristic," Department of Economics Working Papers 2007_09, Durham University, Department of Economics.
    • Handle: RePEc:dur:durham:2007_09
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    References listed on IDEAS

    as
    1. Grether, David M., 1992. "Testing bayes rule and the representativeness heuristic: Some experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 17(1), pages 31-57, January.
    2. Camerer, Colin F, 1987. "Do Biases in Probability Judgment Matter in Markets? Experimental Evidence," American Economic Review, American Economic Association, vol. 77(5), pages 981-997, December.
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